Yahoo Finance Intu collapse will cause a drag on all shopping centres and their banks - so watch out
The collapse of Intu is not just bad news for shareholders and employees.
It’s also grim for the owners of every other shopping centre in the UK.
Why? Because when the administrators are appointed (probably later today) they will almost certainly now launch a fire sale of Intu’s stakes in its 17 centres across the country.
KPMG will want to sell those minority holdings as soon as it can to realise anything for Intu’s creditors. The banks now in control will want to sell, too.
At a time when the market to buy and sell shopping centres is pretty much entirely frozen, the only way to do that is through dropping the price — and that will rebound on the valuations of malls owned by Hammerson, British Land and all the rest.
Shopping centres already tumbled in value by about 30% last year — depending which data you look at. Intu’s next numbers were due out in a few weeks and would have been ugly, especially after it barely managed to get 10% of its quarterly rents in this week.
British Land — which thankfully has office space to shore itself up with in these grim times for retail real estate — may get some respite from its portfolio losses by picking up the contract to run Intu’s jewel-in-the-crown Trafford Centre.
But it’s far from clear who is going to end up running the rest when the banks take control; it takes skill to operate a beast like Lakeside. From what one hears, there aren’t queues of operators banging on the doors to take over the contracts. CBRE is conflicted out. Ellandi, another UK mall operator, is said to be interested but whether it has the ability to take on Intu’s bigger sites is a moot point.
Why on earth the banks were daft enough to lend to Intu in the first place is anyone’s guess. It’s been clear for years that it was on a downhill slope.
Now they’re left with a major headache entirely of their own making. What a mess.
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